Fourth Quarter 2018 Earnings

Delmarva Bancshares, Inc. (the “Company” or “Delmarva”), parent company for 1880 Bank, today reported net income of $1.2 million or $0.19 per share for the quarter ended December 31, 2018, compared to net income of $1.2 million or $0.20 per share for the fourth quarter of 2017. The Company’s net income for the twelve months ended December 31, 2018 was $3.4 million or $0.56 per share, compared to $4.1 million or $0.69 per share for the December 2017 twelve month period.

Net income for the December 2017 quarter includes a deferred tax asset (DTA) write-down of $2.6 million, $0.43 per share, related to the Tax Cut and Jobs Act (TCJA) signed into law in December 2017, recapture of the remaining $3.4 million in DTA valuation allowance, $0.57 per share, and nonrecurring charges related to nonperforming loans and other real estate owned of $339 thousand, $0.03 per share. DTA recapture for the year ended December 2017 was $4.4 million, $0.74 per share. Excluding the impact of the TCJA, recapturing the remaining DTA valuation allowance and nonrecurring items, core net income was $563 thousand and $2.5 million, or $0.09 and $0.42 per share respectively, for the December 2017 three and twelve month periods. Fully diluted tangible book value per share increased to $7.26 at December 31, 2018 from $6.73 at December 31, 2017.

Delmarva’s total assets were $378 million at December 31, 2018, compared to $355 million and $355 million at September 30, 2018 and December 31, 2017, respectively. Total loans were $256 million at December 31, 2018, representing a $7.3 million or 3% increase over December 2017. Total deposits were $320 million at December 31, 2018, compared to $297 million and $300 million at September 30, 2018 and December 31, 2017, respectively. Non-interest bearing deposits represented 27% of total deposits at December 31, 2018. As of December 31, 2018, non-performing assets were 1.33% of total assets compared to 1.16% and 1.63% of total assets at September 30, 2018 and December 31, 2017, respectively.

Fourth Quarter Performance Highlights:

Net income was $1.2 million or $0.19 per share for the December 2018 quarter, compared to net income of $1.2 million or $0.20 per share in the fourth quarter of 2017. Net income for the twelve months ended December 31, 2018 was $3.4 million or $0.56 per share, compared to $4.1 million or $0.69 per share for the December 2017 twelve month period.

Total Deposits increased by $20 million or 7% over December 2017. Non-interest bearing deposits represented 27% of total deposits at December 31, 2018.

Total loans increased by $7.3 million or 3% increase over December 2017.

Non-performing assets were 1.33% of total assets at December 31, 2018, compared to 1.16% and 1.63% of total assets at December 31, 2017, respectively.

Total assets at December 31, 2018 were $378 million versus $355 million and $355 million at September 30, 2018 and December 31, 2017, respectively.

Cost of funds at the Bank was 0.37% and 0.32% for the three and twelve months ended December 31, 2018, respectively, compared to 0.29% and 0.25% for the three and twelve months ended December 31, 2017, respectively.

Net interest margin at the Bank was 4.02% and 3.94% for the three and twelve months ended December 31, 2018, respectively, compared to 3.80% and 4.01% for the three and twelve months ended December 31, 2017, respectively.

Return on assets (ROA) was 1.26% and 0.96% for the three and twelve months ended December 31, 2018, respectively, compared to 1.37% and 1.26% for the three and twelve months ended December 31, 2017, respectively.

Return on equity (ROE) was 10.23% and 7.62% for the three and twelve months ended December 31, 2018, respectively, compared to 11.28% and 10.06% for the three and twelve months ended December 31, 2017, respectively.

The efficiency ratio was 60.40% and 67.37% for the three and twelve months ended December 31, 2018, respectively, compared to 77.41% and 70.90% for the three and twelve months ended December 31, 2017, respectively.

Fully diluted tangible book value per share was $7.26 at December 31, 2018, compared to $7.04 and $6.73 at September 30, 2018 and December 31, 2017, respectively.

Liquidity remained strong and capital ratios exceeded all regulatory guidelines for a “wellcapitalized” financial institution.

“We are pleased to report good performance results for fourth quarter and yearend 2018. We paid our first quarterly cash dividend since 2009 in early November 2018 for shareholders of record as of October 1, 2018. We expect continuation of a quarterly dividend in 2019,” said Kim C. Liddell, Delmarva’s Chairman and President.